Wednesday, October 13, 2010

#%#&#t^*(&# BLASTED Ethanol!! We are about to get more of it for our cars! That means less corn for food...I apologize in advance to all you starving people on "The Margin".

A nice example of interest group politics intersecting with economics.  Two interest groups (Farm Lobby and an ethanol lobby (fronted by a former presidential candidate) )exerting a disproportionate amount of influence over a policy that is roundly condemned by virtually everyone else on the planet, from the auto industry and consumer groups, to environmenalists. 

More Ethanol to Be Allowed in Cars

 "The agency's move is likely to be strongly challenged by livestock ranchers, auto makers and oil refiners. While the groups have varying motives for opposing greater corn ethanol production, they—along with many environmentalists—generally say the government hasn't conducted sufficient testing to warrant higher concentrations of ethanol in motor fuels...While the groups have varying motives for opposing greater corn ethanol production, they—along with many environmentalists—generally say the government hasn't conducted sufficient testing to warrant higher concentrations of ethanol in motor fuels. 
It is going to create a two-tier system at the pump...This won't cause any confusion...or will it?

"As early as Wednesday, the Environmental Protection Agency plans to announce it will allow ethanol levels in gasoline blends to be as high as 15% for vehicles made since 2007, up from 10% currently, according to two people familiar with the matter.  Anticipating such criticism, the EPA plans to also solicit comment on how gasoline pumps should be labeled, so as to avoid or reduce the potential that drivers will put the wrong fuel into their cars, the people familiar with the matter said."
So, pumps will have to be re-labeled and precautions taken by businesses to make sure people put the right gas in their cars depending on the year their car was produced.  When it is introduced, I am going to take a lawn chair over to my local Walmart and watch people figure out which gas pump to pull up to...I wonder if the warning label on the pump will  also have a number to call the EPA for inquiries...I would hate to be on the receiving end of those messages...
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